When it comes to tax jargon, most people prefer to bury their heads in the sand instead of trying to understand all the confusing terms that tax practitioners use. Taxpayers just want to do their tax quickly and easily, and if they’re due - receive some money back from SARS. A lot of confusion surrounds the process, but by understanding three simple terms you can make tax season a little bit easier.
Return, rebate and refund are the most commonly misunderstood words when it comes to tax, as they’re often used interchangeably. In fact, even some practitioners confuse the terms! While they sound similar, they each have a distinct meaning. Let’s have a look.
A return, short for "tax return", is the actual tax document form that taxpayers must complete and submit to SARS each year. For individuals this is called an ITR12 form, which is an abbreviation for Income Tax Return for 12 months. It’s called a "return" because essentially it’s a return of information from you back to SARS for a 12-month period. SARS has information on your taxes and financial situation, but they want you to send information back to them so they can check that they have everything correct on their side. This ISN’T a return of money to the taxpayer.
A rebate is an amount by which SARS reduces the actual taxes owing depending on certain circumstances. SARS will calculate the amount of tax that you owe to them, based on your income and expenses throughout the year, then if certain conditions apply, they’ll reduce the amount due.
The most common rebate in tax terms is for age. The applicable amounts are adjusted annually but there are 3 different levels, subject to your age.
1. Primary rebate – under 65 years
2. Secondary rebate – between 65 and 75 years
3. Tertiary rebate – over 75 years
Depending on your age group, you’ll qualify for the primary, secondary or tertiary rebate, which will reduce your tax obligation to SARS. Nice!
Refunds are the most exciting part of the tax process because they mean money is returned from SARS and put into your bank account. Spending spree, anyone? They occur when SARS gives money back to you because you or your employer paid too much tax to SARS. There are several reasons for such an overpayment, but if taxpayers are in this position then they’ll be due a refund from SARS. Most times the taxpayer has no idea that they’re due a refund and the extra money can come as a welcome surprise!
Remember though, you need to be paying taxes and submitting tax returns diligently every year in order to be due a refund. If it happens that you’re due a refund but you have outstanding tax returns (even from a number of years back) or other issues pending with SARS, they won’t release the back until everything is updated. Want to see if you'll qualify for a refund? You can check using our Tax Refund Calculator.
So when tax season opens in July, RETURN your information to SARS, qualify for a REBATE, and hopefully you will get a REFUND :)
For the tax filing 2024, non-provisional taxpayers have to submit their ITR12 by 21 October 2024. This means all the income and deductions for the period 1 March 2023 - 29 February 2024.
Do Your Tax Return Easily